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Obama’s Impassioned Deficit Sell

Obama’s $4 trillion deficit-reduction package instantly fell flat with Republicans. But the real audience for the impassioned president was his disillusioned base. Daniel Stone reports.

President Obama on Monday offered a new deficit-reduction package with big tax increases for the rich and minor changes to Medicare and Medicaid, one that is dead on arrival at Capitol Hill. But Obama’s goal wasn’t to win over Capitol Hill; it was, rather, to rally Democrats around core values as both parties begin arduous negotiations over how to revive the economy while reducing the nation’s debt.

From the White House Rose Garden, Obama passionately laid out his full plan, which includes $1.1 trillion in defense cuts by drawing down the combat mission in Iraq and nearly $580 in reductions to health-entitlement programs. Both components have historically been ardent goals of conservatives, especially in the era of the Tea Party, which has sought to cut the deficit and reshape expensive entitlement programs.

But the third component, $1.5 trillion in tax reform aimed primarily at affluent Americans, has grabbed most of the package’s attention, and has already been deemed by top Republicans as a nonstarter. White House officials spent much of the weekend trying to wrestle away that narrative and argue the importance of raising money from those who could afford it most.

“It’s a plan that reduces our debt by more than $4 trillion and achieves these savings in a way that’s fair, by asking everyone to do their part so no one has to bear the burden on their own,” Obama said. The proposal, he announced, would include $2 in spending cuts for every $1 in revenue increases.

The White House’s laundry list of deficit-cutting ideas resembled the “grand bargain” the White House flirted with in talks with congressional Republicans this summer. The idea never got off the ground after House leaders walked away from discussions. Senior House leaders, as well as many GOP presidential candidates, panned the package over the weekend.

Obama took aim at Speaker John Boehner directly, ridiculing his and his party’s negotiating style. Last week Boehner gave a speech saying that deliberations couldn’t be mired in “my-way-or-the-highway thinking,” yet immediately drew a line in the sand against any tax reform. “So the speaker says we can’t have it my way or the highway and then basically says ‘my way—or the highway,’” Obama said to some laughs.

The tax provision, meanwhile, has been given the shorthand of the Buffett Rule—a reference to Warren Buffett, the chairman of top hedge fund Berkshire Hathaway, who’s worth about $50 billion and is an occasional, and ex officio, economic adviser to Obama. Buffett has long complained that he pays a lower tax rate than his secretary, and that he could afford to increase his tax bill to get the country on better economic footing. Top Republicans mocked Buffett on the Sunday talk shows.

Even though Obama aimed his sharpest lines toward Republicans, the real audience may be weary Democrats.

But Obama made the impassioned case against what he called a one-sided deal, even quoting George Washington, who underscored the import of tax revenue to pay public debts. “He understood that dealing with the debt is—these are his words—always a choice of difficulties,” he said before issuing a veto threat to any bill that doesn’t address taxes.

A small audience assembled in the Rose Garden applauded Obama when he finished speaking. And even though he aimed his sharpest lines toward Republicans, the real audience may be weary Democrats. The president’s base has seen him capitulate twice over the past year on the issue of increasing revenue through taxes. If only to boost his own credibility with disillusioned progressives—not to mention his electoral chances in 2012—he’s desperate not to make it three.